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ANEK [815]
3 years ago
7

A government experienced significant loss of certain roadways and bridges as a result of major flooding. Which of the following

estimation approaches would be most useful in estimating the amount of asset impairment that has occurred?a. Deflated depreciated replacement cost approach.b. Service units approach.c. Restorative cost approach.d. None of the above; each of these three approaches would be equally useful.
Business
1 answer:
Masja [62]3 years ago
7 0

Answer:

.c. Restorative cost approach

Explanation:

Service unit approach : This approach is meant mainly for service units , providing service to the society. When there is decline in no of service unit due to change in circumstances or technological obsolescence, or due to legal factors etc. this approach is made .

Deflated depreciated replacement cost approach:  This method is adopted when a capital goods or asset undergoes change in the manner it is used or when there is change in the duration of use.

Restoration cost approach : This approach is made when there is sudden loss in the value of an asset due to some unforeseen circumstances like flood , fire etc. The cost required to restore the asset is taken into account in this approach.

The present case belongs to this category.

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The relationship between the straight-line and double-declining-balance method is that they D. Produce the same total depreciation over an asset's useful life.

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What this means is that both methods will depreciate an asset by the same amount at the end of the asset's life. However, the depreciation amounts will vary by method on an annual basis.

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